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Is no-fault auto insurance reform good for Michigan?

WZZM 13 Staff, WZZM 13 8:54 p.m. EDT April 25, 2013

Gov. Rick Snyder put reform of the state's auto no-fault law front and center in his State of the State speech in January. 'When you look at Michigan, it's too expensive for auto insurance,' he said today. / JARRAD HENDERSON/Detroit Free Press(Photo: WZZM)

(WZZM) -- State lawmakers are considering a bill that would overhaul Michigan's no-fault insurance law. One of the lawmakers who sponsored the bill is State Rep. Lisa Posthumus-Lyons (R) Alto.

In the video above, Posthumus-Lyons and Mike Dabbs, president of the Brain Injury Association of Michigan debate the proposal and its effects on drivers and accident victims.---------------LANSING (Detroit Free Press) -- Benefits paid to people critically injured in car crashes would be capped at $1 million under a legislative plan to reform Michigan's no-fault auto insurance system.

Gov. Rick Snyder was joined by insurance industry executives and legislators to endorse the plan, which they said would save the average family $250 a year in insurance costs.

"When you look at Michigan, it's too expensive for auto insurance," Snyder said. "Michigan versus the surrounding states, we're the eighth highest in the country. We need to do something about it."

The bill would require medical providers to charge the same costs for procedures, no matter what insurance is used. It also would require insurance companies to lower premiums by $125 per vehicle for one year.

"My hat's off to Snyder," said Steve Hood of Detroit, who pays more than $300 a month for insurance on his 2005 Chrysler 300. "Anything he does helps because auto insurance is a hidden Detroit tax. It's something that we get that nobody else does."

But Arnie Grinblatt, 54, of West Bloomfield said he worries that the changes could hurt him as a 2001 crash victim who uses a wheelchair and who has far exceeded the $1-million cap that would be placed on catastrophically injured people.

Under the proposal, people currently receiving benefits would continue to get lifetime care. But Grinblatt fears that other changes, such as a cap on payments for caregivers and fees for services, would change his situation drastically.

"I don't have other health insurance to pay for that, so I would end up on Medicaid," he said. "I'd be in a nursing home and vegetating."

The proposed package also includes a $25 fee per insurance policy that would go toward Medicaid.

Snyder put reform of the state's auto no-fault law front and center in his State of the State speech in January. He said that Michigan's status in the top 10 most expensive states for auto insurance was a drag on the economy and that the system was in desperate need of major changes.

Drivers now pay an annual fee - it's $175, but will go up to $186 on July 1 - into the Michigan Catastrophic Claims Association (MCCA), which reimburses insurers for costs of more than $500,000 for the care and treatment of those seriously injured in automobile accidents.

The MCCA, which is run by the insurance industry, would be phased out and replaced with a nonprofit entity that would be appointed by the governor and subject to public scrutiny. The per-vehicle fee would not go away, but Kevin Clinton, director of the state Department of Insurance and Financial Services, predicted it would be dramatically reduced.

A no-fault reform bill was introduced last year and got out of committee, but it never was voted on by the full House of Representatives or the Senate.

Opponents of capping the benefits, including hospitals and other health professionals, say it will force some critically injured people into bankruptcy and onto Medicaid rolls.

The Michigan Health and Hospital Association said the proposal just transfers costs from insurance companies to taxpayers because Medicaid would end up picking up uncovered costs for many injured people.

"Attempts at cost shifting by auto insurance companies to the Medicaid system and taxpayers is a tired approach, rejected in the Legislature last year and overwhelmingly by voters in 1992 and 1994," said Spencer Johnson, president of the MHHA.

State Rep. Kate Segal, D-Battle Creek, predicted a cool reception in the House.

"The governor talked about a one-year premium cut guarantee and then the market will take over," she said. "But I don't have a lot of faith in a one-year guarantee."